Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296176 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11087
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The Global Minimum Tax (GMT) is applied only to firms above a certain size threshold, permitting countries to set differential tax rates for small and large firms. We analyse tax competition between a tax haven and a non-haven country for heterogeneous multinationals to evaluate the effects of this partial coverage of GMT. We show that the introduction of a moderate GMT increases tax revenues in both the haven and the non-haven countries. Gradual increases in the GMT rate, however, induce the haven to set a discriminatory, lower tax rate on small multinationals, causing revenues in the non-haven country to decline at the switch of regimes. We also discuss the quantitative effects of introducing GMT in a calibrated version of our model.
Subjects: 
multinational firms
tax avoidance
Global Minimum Tax
profit shifting
tax competition
JEL: 
F23
H25
H87
Document Type: 
Working Paper
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